4 Undervalued And Oversold Stocks With Strong Inventory Trends

Do you consider yourself a value investor? We ran a screen with that idea in mind.

We began by screening for stocks that are technically oversold, with Relative Strength Index readings over the last 14 days below 40. We then screened for those that appear undervalued relative to earnings growth, with PEG below 1.

Finally, we screened for strong sales trends by comparing growth in revenue to growth in inventory over the last year. We screened for stocks with positive sales trends, with faster growth in revenue than inventory over the last year. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered an encouraging sign.

To screen for strengthening liquidity, we also only focused on those companies with inventory decreasing as a percent of current assets.

For an ‪interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.‬

1. LeapFrog Enterprises Inc. (NYSE:LF): Provides technology-based learning platforms worldwide. Market cap at $579.09M, most recent closing price at $8.62. PEG at 0.7. RSI(14) at 33.04. Revenue grew by 31.35% during the most recent quarter ($71.48M vs. $54.42M y/y). Inventory grew by -16.96% during the same time period ($52.65M vs. $63.4M y/y). Inventory, as a percentage of current assets, decreased from 35.% to 21.82% during the most recent quarter (comparing 3 months ending 2012-06-30 to 3 months ending 2011-06-30).

2. Teradyne Inc. (NYSE:TER): Provides automatic test equipment products and services worldwide. Market cap at $2.74B, most recent closing price at $14.60. PEG at 0.8. RSI(14) at 34.34. Revenue grew by 33.56% during the most recent quarter ($548.28M vs. $410.52M y/y). Inventory grew by -2.56% during the same time period ($137.9M vs. $141.52M y/y). Inventory, as a percentage of current assets, decreased from 10.53% to 10.47% during the most recent quarter (comparing 3 months ending 2012-07-01 to 3 months ending 2011-07-03).

3. IRSA Investments and Representations Inc. (NYSE:IRS): IRSA Investments and Representations, Inc., through its subsidiaries and joint ventures, engages in a range of diversified real estate related activities in Argentina. Market cap at $386.57M, most recent closing price at $6.68. PEG at 0.5. RSI(14) at 36.8. Revenue grew by 7.42% during the most recent quarter ($339.15M vs. $315.71M y/y). Inventory grew by -36.77% during the same time period ($184.77M vs. $292.23M y/y). Inventory, as a percentage of current assets, decreased from 25.46% to 18.05% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

4. EnerSys (NYSE:ENS): Engages in the manufacture and sale of industrial batteries. Market cap at $1.73B, most recent closing price at $36.04. PEG at 0.85. RSI(14) at 37.91. Revenue grew by 4.34% during the most recent quarter ($593.91M vs. $569.23M y/y). Inventory grew by -2.55% during the same time period ($350.05M vs. $359.22M y/y). Inventory, as a percentage of current assets, decreased from 34.7% to 32.17% during the most recent quarter (comparing 13 weeks ending 2012-07-01 to 13 weeks ending 2011-07-03).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.